YouTube to sell music, games in revenue push

NEW YORK Oct 7 YouTube, the world's most
popular video-sharing site, will start to sell music and video
games and experiment with new advertising formats to grow
revenue, executives said on Tuesday.

The Google-owned (GOOG.O) business is taking the first
steps toward building an e-commerce service through which it
will sell music, films, TV shows, video games, books, concert
tickets and other media-related products featured on the
millions of videos on YouTube.

Visitors to YouTube.com can buy songs from music videos
they watch on the site by clicking on buttons that take them
either to Amazon.com Inc's (AMZN.O) MP3 store or Apple Inc's
(AAPL.O) iTunes store.

YouTube users will also be able to buy video games, such as
Electronic Arts Inc's ERTS.O sci-fi game "Spore" through the
Amazon link.

Amazon and iTunes will share revenue with YouTube when
users buy content through the partnership.

Investors have been asking Google when it would start to
generate meaningful revenue and earnings from YouTube, for
which the Web search leader paid $1.65 billion in 2006.

Google does not break out YouTube's financials, but
analysts at Piper Jaffray Research estimated that the video
site would earn about $200 million in revenue in 2009,
compared with estimates of around $27 billion for Google.

Until now, YouTube has mainly pointed to advertising sales
as its main source of income. It is still experimenting with a
range of formats to take full advantage of the massive
popularity of the site, which has nearly 13 hours of video
uploaded every minute.

YouTube had 330 million visitors in August 2008, according
to comScore, which measures Internet audiences.

"There'll be lots of different solutions for lots of
different problems," Shishir Mehrotra, YouTube director of
product management, said in an interview. "We've tested a lot
of things already, and we're going to be testing more in the
future. Some will work, some won't.

One format with which YouTube is experimenting is InVideo
advertising, which runs text ads along the bottom of videos
as they play. Other formats include contests sponsored by
advertisers and home page video ads.

YouTube executives said pre-roll advertising, where a 10 to
20 second ad runs before a video starts, is not always the best
format for some of the shorter video clips on YouTube. But they
did not rule out using pre-roll ads altogether.

The company is also betting that its video ID system will
help drive advertising. Video ID enables content owners, such
as music and TV producers, to know when copies of their video
clips are uploaded to YouTube by users, YouTube said. The
content owners can then share in advertising generated around
that copied clip.

The content owner could also use the video ID system to
remove the videos.

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